Central Banks' Liquidity Support Will Increase

Central Banks' Liquidity Support Will Increase

It is said that the liquidity support to the markets will increase after the Fed. Central banks from Japan to Australia joined the Fed to provide liquidity support to the crisis markets. Monetary authorities aim to relieve worried companies and prevent an increase in short-term interest rates. In addition to the previous short-term funding, the Central Bank of Japan aims to allow the market 200 billion yen with the bond purchase movement outside the plan. The Australian Central Bank (RBA) will provide $ 8.8 Australian ($ 5.5 billion) to the market through daily repo operations. With the coronavirus increasing the severity of the epidemic, the increase in the cash demand of companies around the world puts the markets under stress. Struggling with signals that the market is not working, the Fed pledged to provide more than $ 5 trillion in cash on Thursday. Sumimoto Mitsui Trust Bank Ltd. in Tokyo Market strategist Ayako Sera said, “The fact that the economic activity remains lifeless for a longer period due to the threat of viruses, brings the risk of tightening liquidity for companies and some country bonds.” Central banks provide liquidity after investors withdraw cash from the markets. Even Treasury bonds doesn't seem safe for investors, as traders start selling bonds to Japan and Australia with the demand for dollars.